Jay Jamison's blog–whatever, whenever

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I just got back from another “South By,” always a fun time. I spent the weekend there, which given SXSW‘s total boondoggle nature, is I think about the right period of time to be there. Having caught up with other folks who attended and having traded notes, and now having attended for 3 years, here are a few Do’s and Dont’s for SXSW. Pro Tips (alright, potentially only semi-pro tips).

Wear comfortable shoes. SXSW is a place where you should be spending a lot of time walking and standing. Wear the most comfortable shoes you own. For me, I bring and wear a pair of Brooks running shoes. I could walk to Arkansas in them, they’re that comfortable.

Avoid conference sessions (unless I’m speaking . Every year I make this mistake… I get my badge, and I think, wow I should do something useful like go to a conference session. This year, I did this and I ended up at a session where a guy had as his powerpoint slides pictures of kittens… talking about what I parsed to be the evolution of work and questioning why our normal workday was roughly 8-5. Snooze fest.

Do make sure your app works. Highly touted mobile appHighlight launched a new version of its app prior to SXSW. They garnered press on their cool ice cream truck. I thought I’d reinstall Highlight to see how it had evolved since the last SXSW. Unfortunately, for me at least, I couldn’t get Highlight to work after installation. When I click the “Sign in with Facebook” button to actually use the app, nothing happens. So other than a splashscreen, Highlight doesn’t really offer me anything. I’d be interested to learn whether anyone else ran into this problem. (A few disclosures .. First, BlueRun Ventures, where I work, is an investor in Banjo, which is often positioned as a competitor. Two, I reinstalled Highlight twice to try and overcome this issue, unsuccessfully–user error may be at work here, but I’m dubious.) Robust testing pre-launch, especially for mobile apps where Apple will take weeks to approve updates, is an absolute must do. Quick plug: check out mobile testing platform Appurify (disclosure: I’m an investor), when you want to put your mobile app through a rigorous QA and testing regiment.

Drink a lot of water. Next year I’m bringing a Camelback and just wearing it. SXSW does have a lot of partying. At the same time, Austin restaurants are pretty weak at getting you water. Get water every chance and place you get.

3 quick observations this morning from the land of tech, all fueling a sense that a fun and relatively rosy future is ahead in the industry. All from the tech section of the NYT.

At a basic infrastructure level, it was neat to read about Violin Memory’s launch of its data storage cards being made available for individual computer servers. If you spend any time in this industry, you know that the march of Moore’s Law is going to increase the capacity and capabilities of computing technology, you just need to give it time. But it’s always fun to see a discontinuity in things like storage, at least it is to me. I’m not sure what I’d need to buy an individual server iwth 1.4 terabytes of flash memory, but man, would I like to see it. What Moore’s Law giveth, we all find ways to taketh away. It’s a Good Thing to read about Violin Memory’s launch, hope they do well.

Second, it seems the disruption of Old World Media by technology continues, with the NYT report that TV Pilots are turning to Netflix, Amazon, Microsoft’sXBOX division and others, as opposed to TV networks. For a while now, traditional media of TV, movies, and music have all been victims of tech’s massive disruption. They’ve had to respond, with anything. To a drowning man, everything looks like a raft. And it’s awesome to see these new channels and customers coming online. Netflix’s House of Cards was terrific content, and while there’s always a lot of dreck on the tube, you can find a lot of gems–Justified, Breaking Bad, The Wire, etc., etc. More distribution channels over the web for better content–nom nom nom.

Third, fun to see a headline calling out the “Cult of Evernote.” I’m a total Evernote Fanboy. Not necessarily a cult member, I don’t think, as I’ve not yet found a way to use anything in the Evernote “Trunk,” but I’ve got to hand it to them. An absolutely fantastic product that’s never let me down, Evernote has built a great franchise. Let’s hope the recent security scare from the weekend is handled well (so far, so good), as a breach of Evernote would be absolutely disastrous to me, and I assume others.

All in all, 3 Good Things on a Tuesday morning, a nice way to start the day.

It seemed just a few months ago that many in the Valley were griping that the mobile app ecosystem was dying. Looks like that might have been overblown. Today’s WSJ online has right at the tippy-top two interesting articles on the continuing growth of mobile generally, and mobile apps in particular. There was a lot to digest.

First, revenue from mobile apps continues to surge–according to Gartner, app store revenue is expected “to rise 62% this year to $25 billion.” At the same time, the battle to attract and retain new users is definitely getting more challenging, with the WSJ citing “double digit year-over-year” growth in the cost of acquiring users through advertising. Big growing market, and an increasingly maturing and sophisticated ecosystem of marketing and promotion services gaining hold.

My view: this market is nowhere near saturated and new entrants have opportunities. The data support this, as only 63% of apps used daily now differ from those used a year ago. Beyond this quantitative signal, the WSJ provided I thought an interesting qualitative look-see at what a dozen or so business leaders, athletes and entertainers saw as their key go-to apps. What struck me here is how relatively homogenized the choices were: a few users of Notes (the iPhone bundled note-taking app), Evernote, Uber, a few different news readers. (Interestingly, Angry Birds was cited by several as being so addictive that these users had to delete the app from their phones.) This to me speaks to the increasing opportunity for developers to continue to build and deliver valuable services via mobile smartphones and tablets. Of course, with 700,000+ apps on the Apple and Google stores, discovery will remain a challenge. But given the continuing growth and the fact that so many daily use apps weren’t used a year ago, the opportunity environment has upside. Big risk, big potential reward.

The second theme in these articles in the WS was what it called the “evolving economics” of apps. The basic thrust was that app developers are experimenting with different price points and monetization schemes across different app ecosystems, Android, IOS, Windows Phone, etc. This trend is one I absolutely see. It’s also one that I think has a lot of room left to run. The WSJ discussed mainly purchasing price points from an app store. That’s kind of basic, obvious. What’s coming is, I think, price testing and discrimination based on different usage in the app. Power packs, premium features, etc, will get tested and offered at different price points for different user types. Also, expect new developer infrastructure, offering real-time testing and debugging, A/B routing and others to evolve to improve the flexibility in offerings that developers have on this front. Early stage startups like Appurify and Leanplum are examples to watch in this space. Others in the continuing integration (CI) and the platform as a service (PAAS) will help here too.

In tech, we talk a lot about how fast things change, how dynamic things are. As an investor in mobile, I think and talk about this all the time. I sound like a booster, sometimes even to myself. I try to balance that, I really do.

This week, though, wow, if you ever thought that the landscape was settling and the picture was coming into focus, did that ever get thrown out of the window.

And finally, it’s exciting to see that someone other than Apple is starting to see consumer hype and love in the mobile market, with the WSJ is reporting that the upcoming Galaxy IVS from Samsung is seeing “iPhone like hype.” I’m not hating on Apple here, I just think its great for everyone when there’s strong competition, which Samsung appears to e bringing.

During the discussion, he talked to me about how he thinks about building public technology companies. He mentioned a metric he thinks about a lot: Market Cap per Employee. He thought that this was an interesting expression of a company’s culture, of how much opportunity, how much energy there likely was at the company. He then rattled off the Market Cap per Employee of several large public tech companies.

If you’re thinking of working at a public company, then this is probably an interesting metric to look at and consider.

Alternatively, if you’re running a startup, it’s also an interesting metric. You might consider your current valuation and divide it by the number of employees. See where you stack. It’s probably at least some kind of indicator of the opportunity and the momentum in front of you.

And that’s ok. Sh*t happens. New ideas fail every day. That’s reality. What *has* changed I think that the costs of failing are dropping. A lot. Moore’s Law, the continuing growth and robustness of cloud-based infrastructure and open source tools and development environment, and the development of methodologies like the Lean Startup, have all combined to help teams run customer development cheaply and quickly. They can build and vet ideas quickly and when they start raising money, they have a much better sense of what works and why.

Color ran counter to this–it went big. On every front.

I think the cautionary tale is that you should be careful what you wish for. I was once invited to judge a startup pitch contest. This contest was held at Color’s Headquarters in downtown Palo Alto. This was post Color launch, and the bloom was definitely off the rose. Half of Color’s office space was allocated now as kind of event space, which is where we held this startup pitch competition.

Anyway, before the contest, there was a long networking cocktail type event. I remember standing there talking to different startup teams. One of the teams I talked to pitched me their idea. I said to them, ‘hey, what you’re doing is interesting. I am not interested in investing in it [for wahtever reason, can’t remember] but let me know if there’s anything I can do to help.’ One of the founders looked at me, then glanced around the room and said to me, ‘Well, there’s a $42m check sure would help,’ referring of course to the monster Series A Round that Color had reportedly raised.

My response: “Look, be careful what you wish for. If I had invested $42M in this thing, and now half of the prime real estate in Palo Alto was being used as event space for cocktail parties and startup pitches, I would want to fire everything that breathed. This would make me so angry. Go out and build something awesome. Then the world of investors will find their way to your door.”

Too much of the press and Silicon Valley community celebrates the raising of money. Indeed, a raise is seen as press worthy. I’m less convinced that its news worthy–some founder convinced some investor to write a check. Meh.

To me what is news worthy is winning a customer, getting a really high profile, value added partnership nailed and in market, landing a truly world class exec or developer. The really important building blocks to constructing a real company are what we should be celebrating. Not that you got someone to write you a check. Focus there, and do that great and the funding announcements will find a way of happening.

Today, Apple CEO Tim Cook posted an apology letter to its customers over the release of its mapping product in iOS6. It is direct and sincere. It also recommends partner (or potentially competitor) products to users. A link to the letter is here, and it is a clear sign of Cook’s leadership style and how this style differs from Jobs’ style.

One of BlueRun Ventures‘ portfolio companies, Waze, is specifically recommended to users. This is quite a turn of events, as just a few months ago, Apple’s announcement that it was launching its own mapping product had led many in the technorati sphere to pronounce Waze roadkill. What a difference solving a hard technical problem makes.

This is not a post that is negative to Apple at all. It is still the most amazing and most valuable company in the tech world, and rightly so. I am a big time Apple fanboy. At the same time, today’s development is actually great news for startups as a whole for several reasons.

There are no sure things. First, today’s note is evidence that just being the 800# Gorilla isn’t enough to guarantee winning a market. With some markets, even if you are the most valuable company on the planet and you can literally devote limitless resources to a technology, you are not guaranteed a win, at least straight out of the gate. In some market segments, like Maps, people depend on them and care about them greatly. And it turns out the technology solution is difficult and takes more than just money to solve–it’s going to take, in the estimation of some analysts “two or three years,” to for Apple to build a competitive offering.

Competition is good. The second observation that’s good for startups is that this is evidence of a healthy and competitive marketplace. Imagine that this happened in the PC ecosystem at the height of Microsoft’s dominance with Windows… Users would have complained and raised a fuss, and Microsoft would have stuck with the message that ‘as more users use our [crappy] maps, the maps will get better,’ but there wouldn’t have been the same ecosystem support and robustness. There’d also not have really been an alternative.

Today, not only is Apple recommending products like Waze, but analysts are wondering whether this will drive more users to Google’sAndroid platform, where Google Maps are happily distributed. This is the wonder of competition–the invisible hand is clearly at work. More competition at the platform level is good for startups and good for users, as it drives more diversity, more desire for offerings that each ecosystem can build upon.

Mobile is about local and real-time–maps here are key. The third observation that is that #MapGate and the customer uproar over it highlights things I’ve written about before. Namely, the Mobile Web 3.0 is upon us, and it offers the opportunity for real time commerce right here right now at the hyper local level. When you think about computing as being very local and real time, you realize that the map is the central locus point, that the map is extremely strategic in this world. This is great news, not just for Waze, but for the coming future of the Mobile Web 3.0.

Apple’s recent iPhone 5 announcement and upcoming launch has been a fascinating testament to the power of brand and to the very strong emotional connection that mobile devices have created with users. The mobile wave just keeps on surging!

So on the one hand, the iPhone doesn’t have much new to justify the upgrade. On the other hand, users are snapping them up faster than any iPhone ever. What gives?

A big part of this is Apple and its terrific marketing. But the larger story is that Mobile is just different. Smartphones, barely 5 years old, are devices we depend on–80% of respondents in a recent survey would not leave home without their smartphone. And our usage of them in terms of time per day is surging–one recent survey I saw showed a >30% year over year growth average time per day on the device. Given how central these devices our to our digital lifestyle, any advances and improvements in the leading devices will be ones that users pay close attention to. In the case of the iPhone 5, clearly, millions of them were convinced that it was time to upgrade.

In addition to the core dependency we have on mobile, Apple again is masterful at driving its brand.

This week I got the rare opportunity to have a low key dinner with the founders working at the NewME Accelerator in San Francisco. It was a great visit—the energy and sophistication of the teams there was really strong, and I enjoyed the time.

This talk was strictly Q&A—just me sitting with a group of around 15 founders, fielding questions one after another. I love this format. But if you’ve spent time with me, you’ll know once I get started I don’t really stop talking, so this may not be all that unique.

The founders’ questions were many. Some were specific and use case oriented, such as, “Our team has built a product, we’re getting traction, and we think we need to raise a small seed round. Some are suggesting we raise more, what do you think?” In your case, given the instincts that’ve gotten you this far, I reco following them going forward. If you have an offer to raise more, then think about that then.

Or, “I’m a founder with unique and differentiated real world experience in a specific market, and I want to hire a tech team to build a product this industry needs. How do I raise money to hire them or how to do I hire them before I have money?” Catch 22 — not sure what to say, just have to figure out a solution.

Others were pretty hypothetical, “If you had one company with 2 million users and no revenue, and another company with a small number of users and $50,000 in revenue, which would you be more likely to invest in?” Hm. Totally depends on trajectory and relative opportunities of the two.

In answering the questions, I often had to reiterate a caveat I find myself making a lot these days. Namely, when I’m answering a question on a business I know only lightly, as in when I show up at a Q&A with founders, my answers are going to be broad brushstroke generalizations. These generalizations may not work for you in your particular situation. Mileage can vary, a lot. The core truth is that your on the ground reality may be the sort of thing where my advice, or the advice of other outside perspectives, is pretty useless or even harmful.

In my own experience, in building startups the core on the ground reality is pretty muddy and opaque. This is a constant reality—startups are inherently dealing in uncertainties, and uncertainty creates ambiguity. Uncertainty and ambiguity is more the norm than the exception.

At the same time, many in our community, investor types like me and other outsiders, present a worldview that is much more certain. Company 1 is screwed, Company 2 is can’t miss. Do A, do not do B. The world is black; not white. Approach y worked for company x, so you should think about doing y too. In an uncertain world, the narrative of certainty is valued.

I disagree with this thinking. Far more is unknown than known, especially by those of us far removed from the front lines of our business. I encourage founders to hear out different opinions, but retain your own perspective, informed by the reality of your situation.

In most cases, the situations we’re dealing with aren’t black and white. They’re gray. Beware of people who make you think the answers are simple and that generalities work.

In a way I share Biggs’ fears: it would be shameful if the bottom of the tablet market fall out, if tablets get renamed ‘craplets,’ But for the most part, I disagree with the thinking. I’m more bullish on the Tablet market overall, for several reasons.

First, I think the dynamics of the tablet industry and market are completely different than the netbook/PC business. In the PC business, basically the entire profit pool on the hardware side is with Apple and on the software OS side is with Microsoft. The net book phenomenon was spawned by low-cost manufacturers trying to use their unit volume capacity with ever cheaper componentry to try and gain share in low-income, emerging markets, or as supplemental PCs in middle-income households. OEMs like ASUS bet that they could build and hit ever cheaper price points, and that this would create demand.

For these low cost netbook manufacturers, there was always hope that there’d be cheap web-based services that the manufacturers could resell that would then help make additional margin. This was generally an epic fail, as low-cost hardware manufacturers generally lack the skills needed to build a high-quality and well done ecommerce solution.

While netbooks do continue to ship, particularly in emerging markets, they certainly haven’t made a massive dent in the profitability of the industry, nor have they shifted the powerful holds that Microsoft holds on the OS, Apple on the hardware, Intel on the chipset. (Though ARM has undeniably had some impact, particularly in the tablet space.)

In the current tablet industry, by contrast, several key factors are different. First, two of the leading hardware manufacturers are Apple and Amazon. Neither has a strategy of being the low cost leader in hardware manufacturing–that’s not their strategy at all. Instead, both have very substantial and well-delivered services (books, movies, etc.) they distribute through the tablets to users. So unlike the netbook that wanted to try and sell you an upgrade crapplets from their crappy netbook desktops, Amazon Kindle Fire users are buying and reading books, magazines, and movies. So the total value proposition for these tablet makers is totally different. PC makers are all about lower BOM cost, win the lowest ERP on the store shelf. Amazon and Apple has a different approach, one that’s about winning share of one’s digital basket: hardware device, software, services, media, etc.

Given these core differences between the Netbook and Tablet markets, I’m more optimistic that the Tablets will evolve in a different direction. Now don’t get me wrong: I do agree with Biggs that we will see tons of crumby tablets. It is the hardware industry after all, and we still have too many hardware suppliers that will look to deploy resources into a new hardware market. Expect everyone in mobile computing–Samsung, ASUS of course, but also the Japanese OEMs, Toshiba, Sony, Fujitsu, etc–to enter the market. Prices will drop at retail and for users.

And I think that in general this will be fine for the market, though again, you’ll have to wade through a fair amount of junky hardware. The reason it will be fine is because the price point pressure that the low-cost netbook centric tablet guys will drive will have some impact on guys like Apple and Amazon. But at the end of the day, there will be equilibrium. Equilibrium will be achieved when Apple and Amazon find a price point where they have a nice quality Tablet that is priced relatively competitively with lower quality machiens. And Apple and Amazon can both subsidize in effect the price point of their SKUs knowing that users are likely going to use that to consume all sorts of digital media through their stores. Razors and razor blades.